EXCELLENT article on stated income/no doc loans

[LNY]

http://www.consumeraffairs.com/news0...tgages_02.html

[Anonymous]

Not only did the writer in this case get a no-doc loan, it was the most evil of mortgages in Grim's opinion: The Interest Only loan.

There she was with a house, and when she went to sell it, hardly no equity, and luckily she did improvements because otherwise she'd really been sunk.

[LNY]

It's a good cautionary tale. It was enlightening to read the real-life consequences of a loan program that seems so great on the surface. A lot of self-employed people considering this type of loan will certainly not hear these details from their lender. I learned a lot from this piece.

It's also interesting to read the first part of it, that was written about the house purchase itself--full of hearts, flowers and happy butterflies. The link I posted was the post-butterflies part.

[LNY]

Oh gosh, I've been stickied!! In my first week!! 8)

[firstsource]

I made this a "sticky". Everyone should read it that is considering a stated income loan.

Stated income started out as 1) a program that converted a self employed persons income that was shown on taxes into "reality". Self employed people can deduct many of what most people can not deduct. or 2) if 2 people live in the same home, and one's credit is not acceptable at the time to be put on the loan, then add both incomes together, and stated that as one income.

When people change the intent of the program, they are courting disaster, as shown here.

Interest only is a program to help people get into a home initially. At some point principal needs to be paid, and if the household income does not rise fast enough to take care of the additional payment, they are courting disaster, as shown here.

Charles

[LNY]

For reference and perspective, here is how her purchase started out... only a year ago (the happy butterflies). Ignoring the benefit of hindsight, it also contains a lot of useful information on how the no-doc process works.

http://www.consumeraffairs.com/news0...tgages_01.html

[ybrew]

a late bump....

She made this mess on her own. The fault isn't with the lender, but with her entirely.

Lying about her income is just STUPID!

[Hungry4moreKnowledge]

Originally Posted by ybrew

a late bump....

She made this mess on her own. The fault isn't with the lender, but with her entirely.

Lying about her income is just STUPID!

First off, by no means do I condone lying to a bank when getting a loan. However, if you are going to lie atleast have your back up to secure your situation to a Tee. Especially when it comes to purchasing a home.

Furthermore, I couldn't agree with you more ybrew. The no doc/int only loans are excellent and I plan on taking advantage of this type of loan program. I believe you have to use it to your advantage by telling the truth or atleast covering up your mistakes. The lady's story was 100% her fault all the way. No one else'.

Whenever you are entering an agreement of that magnitude you must always have a plan a and plan b. Sometimes even a plan C. In my case and familiarity with bad luck, plan a through j-k.

I plan on purchasing my first investment home in GA and I will definitely be going no doc and maybe interest only depending on the difference in the payment. Its a short term investment for maybe a 5 year period and from there we will see how it goes. Trust me, I will definitely have about 3 back up sources if my tenant defaults on the rent or if anything comes out the blue.

WHEN LIFE HANDS YOU LEMON, MAKE LEMONADE OR GET THE HELL AWAY FROM THE LEMONADE STAND AND LET ME TRY!!!

Sorry for yelling, just explaining how strongly I feel.

[Corbay]

The article seems to be more against varible rate loans than Low doc / no doc loans.

[kemet]

Originally Posted by ybrew

Lying about her income is just STUPID!

Actually, it is NOT just stupid, it is Criminal! It is a Federal crime, bank fraud, to lie on your mortgage application.

What she and most self employed or small business owners do not realize and certainly will not learn from their "helpful-as-a-funeral director" mortgage broker, is that people have and will continue to go to jail for committing this Felony crime!

Of course, nothing usually happens to these clueless souls...they get away with it...unless they get in trouble and their mortgage goes into foreclosure and is taken back by the bank. Then the Feds start sniffing around the application.

I know of an attorney, of all people who is on the hook for 3 pre-construction properties in Florida that, of all things, are now ready to move into and he is not. He blithly "fudged" and asset figures on his No Doc/Stated/Stated mortgage application.

Now, he can't sell the houses, the builder is competing with lower prices than he paid and he cannot rent them for nearly enough to cover his mortgage payments.

He is frantically feeding those "Alligators" with cash from his kids college funds! He knows all to well what can happen if those properties go into foreclosure. He felt that flipping them would be a "Slam Dunk" (sounds familiar!)

Stated/No Doc loans can not only get you thrown out of your house, they can get you thrown into the Big House! Beware!




__________________________________________________
http://HowtoSolveYourMoneyProblems.com

[Gary Craig]

Originally Posted by ybrew

a late bump....
She made this mess on her own. The fault isn't with the lender, but with her entirely. Lying about her income is just STUPID!

I have to agree, it was more her blame. Owning a home comes with responsiblility.

Stated Loans - are used mainly for people that are self employed, where the income changes (seasonal). Easy loans to do, with a good credit score, business license and an accountant letter. The subject loan a Stated Wage Earner - also easy to do, credit score and VOE with two years work history. On refinances, easy loans to qualify for.

On purchases going Stated, 100% financing almost impossible to qualify for (also no mortgage history). I think there is more to the story.

Since this was an adjustable loan, most adjustables have a fixed period. In the last 7 years for homes under $300,000. 2/28 terms were the most popular type of loan. She had time before her loan stated adjusting, she didn't plan for the situation.

Needless to say - when underwriters inspect loans before they can close, payment shock, benefit to borrower, etc, is all reveiwed. A person has to qualify for the loan given to them.


My $00.03.......

[loanmod]

Impressive and useful article.

[Elle Paris]

Originally Posted by firstsource

I made this a "sticky". Everyone should read it that is considering a stated income loan.

Stated income started out as 1) a program that converted a self employed persons income that was shown on taxes into "reality". Self employed people can deduct many of what most people can not deduct. or 2) if 2 people live in the same home, and one's credit is not acceptable at the time to be put on the loan, then add both incomes together, and stated that as one income.

When people change the intent of the program, they are courting disaster, as shown here.

Interest only is a program to help people get into a home initially. At some point principal needs to be paid, and if the household income does not rise fast enough to take care of the additional payment, they are courting disaster, as shown here.

Charles

Hello,
Your posts caught my attention while I was surfing trying to find out if stated income loans are still to be found for a home purchase in CA. Haven't used VA yet since such a loan, what with all the legal and true tax write-offs, the on-paper income debt ratio won't work, even with the add back ins, although we could afford a modest home with a monthly payment of $1500 or so, tax and insurance impounds included. For the time being, the down payment we have is $13K but it is going up all the time despite the fact that our rent is $1295 monthly. We have a Mom/Pop service company established in 1986. Our credit scores are in the 730s. Here's hoping that you will be inclined to reply and that it won't be too much trouble.
All the best,
Elle

[Elle Paris]

This is an important issue for many people who are now suffering because of the dead-beats who lied about their income to get a stated income loan, resulting in the pure and simple end of stated income loans for many honest hard working people, vets or not. Could anybody please let us know if there are any solutions anywhere?

[Elle Paris]

Originally Posted by Elle Paris

This is an important issue for many people who are now suffering because of the dead-beats who lied about their income to get a stated income loan, resulting in the pure and simple end of stated income loans for many honest hard working people, vets or not. Could anybody please let us know if there are any solutions anywhere?

...or not? or other angle? or government aid? or? something???

[emmajacob36]

This article seems against rate loans than Low doc / no doc loans.

[dbock10]

Good stuff!